A file photo shows the Dhaka Stock Exchange building at Nikunja in the capital, Dhaka. — New Age Photo

The Dhaka Stock Exchange has urged the Bangladesh Securities and Exchange Commission to request Bangladesh Bank to increase the stock market exposure limit for banks to increase institutional holdings in the market.

The DSE has proposed that the limit be increased to 30%, from the current 25%.

The DSE recently sent a letter to the securities regulator in this regard.

The Banking Companies Act 1991, which was amended in 2013, limited a bank’s exposure to the stock market to 25% of its capital. Capital includes paid-up capital, issue premiums, legal reserves and retained earnings.

He also wanted to raise the investment limit for non-banking financial institutions by 5%.

There are 33 banks and 23 NBFIs listed on the stock exchange.

He said that “Bangladesh Bank may be asked to relax the capital market exposure limit for banks and financial institutions with the aim of increasing institutional participants in the market.”

“Banks and financial institutions’ investment in all listed bonds can be kept outside the scope of capital market exposure,” he said.

The exposure is now calculated on the basis of equity market prices, which the BSEC has urged the central bank to calculate on the basis of the cost price.

The BB and the BSEC have clashed lately over various issues, including the banks’ exposure to the stock market, the declaration of dividends, the formation of a remuneration committee and the transfer of unclaimed dividends from the banks to the fund. stabilization of the capital market.

The first exchange submitted a set of tax-related proposals to the National Revenue Board in a pre-budget discussion meeting and the exchange also asked the BSEC to forward the proposals and consult with the NBR to achieve the policies .

The DSE has proposed to the BNR that the minimum difference in the corporate tax rate between listed and unlisted companies should be at least 15% to motivate potential companies to be listed.

The tax on dividend income from corporate shareholders should be reduced to 10% instead of the current 20%, the DSE has proposed.

The exempt limit on dividend income can be increased from Tk 50,000 to Tk 250,000.

Interest income from all corporate bonds, similar to zero-coupon bonds, listed on any stock exchange board, regardless of issuer and investors, may be exempt from tax to establish a dynamic bond market.